Gaps in the completeness of disclosures, the quality of data and the fact that 97% of funds do not regularly quality check their impact data is leading to significant challenges in funds’ impact reporting to investors, according to a recent BlueMark study.
The study found there is generally good practice across the areas assessed, with pilot funds averaging a 61% Gold rating, reflecting strong adoption of impact management best practices. However, scores varied widely from 19% to 86%, with fewer than 25% achieving the highest Platinum rating.
Alarmingly, however, the report showed investors’ impact ambitions are rarely backed by concrete targets or informed by meaningful stakeholder engagement. Only 31% of funds actively incorporate stakeholder perspectives into their monitoring processes, and just 19% of funds set measurable portfolio-level impact targets – such as emissions reductions or beneficiary reach – limiting the ability to assess societal and environmental outcomes effectively.
Significant transparency and accountability gaps “threaten investor confidence” and could raise concerns about ‘impact washing’, BlueMark warned.
Paige Nicol, senior director at BlueMark, said: “Our findings highlight the progress made by leading and specialised funds but also reveal broader transparency gaps that impact the industry as a whole. As demand for transparency grows, standardisation and accountability are needed to ensure impact investing delivers on its promises. With credible reporting, the industry can keep high levels of trust investors place in it, which is critical to scaling impact investing.”
Other key findings
Reporting practices achieved an average score of just 54%, the lowest among the four pillars of governance, management, strategy and reporting that represent key dimensions of impact accountability. In contrast, governance scored 63%, showing strong integration of impact in decision-making, and management led with 67%, with most funds excelling in due diligence.
The study also revealed other disparities in performance by fund size. Both large and small funds outperform mid-market asset managers in impact governance and reporting, while the industry as a whole struggles with underdeveloped reporting practices and meaningful stakeholder engagement.
Meanwhile, large funds on average outperformed both small and mid-market funds across all four pillars, being able to leverage their scale and resources, including advanced tools, dedicated teams and external consultants.
BlueMark’s report draws on findings from its pilot programme for its Fund Impact Diagnostic (Fund ID), which evaluated 37 impact funds managing $326bn in combined assets. Fund ID was developed through five years of research, drawing on learnings from the firm’s verification work and industry standards.
